Bernanke Testimony — Highlights

Ben Bernanke on the economy: "the expansion so far this year has been modest," echoing his earlier comments that "the economic recovery appears to be proceeding at a moderate pace."

But in addressing the "soft patch," he again went to his fallback position: the weakness is "the result of several factors that are are likely to be temporary," listing higher gasoline and food prices and the Japan quake as the main culprits.

On QE2: "we did not expect it to be a panacea for the country's economic problems" but "the program had the intended effects of reducing the risk of deflation and shoring up economic activity." Their expectations that it would lead to job growth "were relatively modest" (about 30,000 jobs a month).

On the possibility of QE3: the Fed has "alternatives for deploying additional stimulus if conditions warrant." He listed "providing explicit guidance" about how long the fed fund rates and the Fed's balance sheet would remain at current levels. A second option would be QE3 (more securities purchases).

On inflation: "Inflation has picked up so far this year" but should show a "significant slowing" in the second half of the year.

On the mood of consumers: "Households report that they have little confidence in the durability of the recovery and about their own income prospects."